Athens News Agency: News in English (AM), 98-03-17

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From: The Athens News Agency at <http://www.ana.gr>

NEWS IN ENGLISH

Athens, Greece, 17/03/1998 (ANA)

MAIN HEADLINES

• Greek markets react positively to ERM entry
• EU, NATO enlargement dominate Simitis talks in Prague
• Spanish admiral on official visit to Greece
• German paper praises Simitis, criticises Yilmaz
• Hungarian Prime Minister in Athens tomorrow
• Greek-Israeli trade awards
• Pangalos says EMU at the centre of Greece's policy
• Mediterranean wetlands under serious threat
• Romeos signals crackdown on rising crime
• Greek money markets back drachma's ERM entry
• Greek stocks discount rate drop
• Greek bonds attractive after devaluation
• Greek opposition sues charging devaluation leak
• Petrol prices raised
• Weather
• Foreign exchange

NEWS IN DETAIL

Greek markets yesterday welcomed the drachma's entry into the European Union's Exchange Rate Mechanism (ERM) and its subsequent devaluation by 14 per cent.

Several bankers and analysts agreed that the prospect of lower interest rates and the implementation of the government's drastic economic measures announced on Sunday, boosted confidence in Greek markets.

Prime Minister Costas Simitis said yesterday that the drachma would not undergo a fresh devaluation, and that the present drachma parity is a parity with which Greece will take part in the European Monetary Union (in 2001).

A government coordinating committee also met yesterday and issued directives for checks on market prices in an effort to ensure the smooth operation of the market.

National Economy Minister Yiannos Papantoniou advised businesses and traders to exercise self-restraint, adding that repercussions on the market would be minor and short-lived.

EU, NATO enlargement dominate Simitis talks in Prague

Prime Minister Costas Simitis had talks here yesterday with his Czech counterpart Josef Tosovsky on prospects for the Czech Republic's accession to the European Union and NATO as well as bilateral relations.

Mr. Simitis, who began a three-day official visit to Prague yesterday, underlined after the talks that Greece had always been of the view that EU enlargement should take in as many countries as possible, while noting that "each country has its own problems and separate negotiations will be conducted".

Asked by reporters on Greece's threat to block EU enlargement if obstacles are placed in the way of accession negotiations with Cyprus due to the problems caused by the Turkish occupation of one third of its territory, Mr. Simitis pointed out that when Cyprus' EU candidacy was accepted in 1995 "the political problem was well known to all".

Mr. Simitis said he had briefed Mr. Tosovsky on Greek-Turkish relations and stressed that Greek-Czech ties were on a good course with possibilities for further substantial improvement.

Mr. Tosovsky agreed with Mr. Simitis' remarks, saying bilateral relations were at a very good level, while negotiations were open and friendly.

Mr. Simitis had talks later with Czech Deputy Premier and Foreign Minister Yaroslav Sendivi on EU enlargement and bilateral relations.

Regarding bilateral issues, Mr. Sendivi said emphasis had been placed on the need to increase trade between the two countries, the formation of joint ventures and Greek investments in the Czech Republic.

Also discussed was the crisis in the Yugoslav province of Kosovo, regarding which Mr. Simitis said Greece's position was the same as that of the EU.

Dialogue, he added, was the only way to find a peaceful solution.

Spanish admiral on official visit to Greece

Spanish Navy General Staff Chief Adm. Antonio Moreno Barbera begins an official visit to Greece on Wednesday to discuss issues of mutual interest with his Greek counterpart, Rear-Adm. Georgios Ioannidis, National Defence Undersecretary Dimitris Apostolakis and National Defence General Staff Chief Gen. Athanasios Tzoganis.

German paper praises Simitis, criticises Yilmaz

"Greece shapes conditions for 2001 entry into Euro", was the title of an article by the German daily "Suddeutsche Zeitung" yesterday.

In comparing recent Greek and Turkish policies, the article focused on prime ministers of Greece and Turkey, Costas Simitis and Mesut Yilmaz, respectively, adding that Greece's image in Brussels as well as in Bonn and Luxembourg was predominately due to the Greek premier's work.

On the other hand, Mr. Yilmaz is held responsible by the German newspaper for his country's declining course vis-a-vis the EU, as well as doing practically nothing to lead his country into a united Europe.

The Suddeutsche Zeitung states that the Greek premier took a decisive step forward by devaluating the drachma, thus safeguarding Greece's entry into the European Monetary System.

Hungarian Prime Minister in Athens tomorrow

Hungarian Prime Minister Gyula Horn arrives in Athens tomorrow for a working visit at the invitation of Prime Minister Costas Simitis. The two men will discuss Greek-Hungarian relations, Hungary's European Union acces sion talks - set to begin March 31 - as well as the central European country's NATO accession.

Mr. Horn will be received by the President of the Republic Kostis Stephanopoulos and will meet Parliament President Apostolos Kaklamanis. Greek-Hungarian trade relations have surged since 1974, while several joint ventures were created in recent years. About 50 joint ventures operate in Greece, while 80 are based in Hungary. Today, Greece holds 13th place in the list of countries with investments in Hungary.

Hungarian exports to Greece for 1997 totalled US$81 million, while Greek exports to Hungary during the same time period were $52.7 million. The first ever visit of a Hungarian head of state to Greece took place in 1996, while Mr. Stephanopoulos is expected to visit in 1998. Finally, Eastern Orthodoxy was recognised as an official religion in Hungary in 1995, while 3,000 ethnic Greeks live in the country today.

Greek-Israeli trade awards

The embassy of Israel in Athens last night delivered its annual commercial awards to Greek entrepreneurs and other officials, whose work contributed to the tightening of relations between Greece and Israel.

Speaking during the ceremony, Israel's ambassador to Greece Ran Curiel referred to the existing potential for promoting bilateral economic relations, as well as furthering cooperation in the Balkans, the Middle East, the Mediterranean and the EU.

The Israeli embassyYs special prizes were handed to Ioannis Papathanasiou, president of the Athens Commercial and Industrial Chamber; Ioannis Tzen, president of the Hellenic Foreign Trade Board (HEPO); Vassilis Paissios, president of the Greek-Israeli Chamber; Yiannis Mosholios, first president of the chamber, and others.

Pangalos says EMU at the centre of Greece's policy

Foreign Minister Theodoros Pangalos said yesterday that "participation in Economic and Monetary Union is at the heart of our foreign and economic policy, while the public's response is positive".

He made the statement in an address at the Royal Institute of International Affairs on Greek foreign policy, and in the framework of "Greece in Britain" events.

"We believe that Europe's monetary union will lead our continent to a new era of prosperity and progress, and that the euro will represent Europe's economic strength, which will be able to impose its views worldwide," he added.

Regarding EU enlargement, Mr. Pangalos said Cyprus would be the first candidate member to complete negotiations for entry as it fulfilled all necessary criteria.

Mediterranean wetlands under serious threat

Wetlands across the Mediterranean are under serious threat due to low water levels and ongoing pollution, according to the secretary of the Ramsar Convention on the protection of wetlands.

Delmar Blasko was speaking in Thessaloniki yesterday during a press conference within the context of the first international meeting of the Mediterranean Wetlands Committee.

The official said that currently there were 154 wetlands in the Mediterreanean protected by the Ramsar Convention, including 11 wetlands in Greece.

Those 11 wetlands, according to Mr. Blasko, were amongst the 45 which require urgent attention.

Romeos signals crackdown on rising crime

Public Order Minister George Romeos expressed his determination to crack down on crime at a meeting held yesterday between senior officials from his ministry and police inspectors from all over the country.

The minister chaired a meeting of senior police officers to discuss the increasing crime rate and the rising participation of foreigners.

Mr. Romeos said the criminal activity of foreigners had increased and that police had not responded in the best possible way, with only small numbers of officers patrolling at night.

It was decided at the meeting to step up police patrols, particularly at night, by putting officers normally with desk duties on the streets. Mr. Romeos said the increased police presence would soon be apparent to all. However, he was careful not to single out foreign nationals as the only factors behind the rising crime rate.

"It is not in our intentions to make a pogrom against foreigners in general who are in Greece. However, we are determined to crack down on crime, since it is a fact that the increase in crime is also due to foreigners. The Greek people expect Greek Police (EL.AS) to provide them with a feeling of security, for this reason we shall do everything possible," he said.

Although clearly reserved, Mr. Romeos agreed with the Union of Police Employees in the ascertainment that illegal immigrants are responsible for the increase in crime and with the need for immediate measures to be taken.

It was agreed that all the police will be mobilised and police their respective areas with foot patrols, particularly at night. In parallel, patrolling will be increased with patrol cars and motorcycles. They will be instructed to arrest all illegal immigrants and check to ascertain whether they have been involved in criminal acts.

The Union of Police Employees proposed the immediate repatriation of illegal immigrants lacking adequate supporting documents and backing for relevant services with more staff and means to carry out their duties.

Greek money markets back drachma's ERM entry

Greek money markets yesterday reacted favourably to the drachma's entry into the European Union's exchange rate mechanism and 14 per cent devaluation, pushing the Greek currency higher.

Also, interbank interest rates dropped to 12.5-14.5 per cent from 18-20 per cent last Friday.

The Bank of Greece intervened in the market to sustain the drachma's rally.

The US dollar fell 2.04 per cent from its new devalued drachma parity to 322.79 drachmas at the day's fixing. The DMark fell 1.86 per cent to 177.19 drachmas, while the Ecu was fixed at 352.04 drachmas.

Bankers reported increased demand for fixed-interest long-term state securities. They also reported capital inflows totalling 450 million in US dollars at the drachma's fixing.

Greek stocks discount rate drop

The Greek bourse, which jumped 7.31 per cent, had discounted an early fall in interest rates and a speedier restructuring of public utilities ahead of their flotation in the market, traders said yesterday.

Analysts expect a massive return of foreign institutional investors to the Greek market seeking to take advantage of lower prices offered by the Athens bourse after the drachma's devaluation.

Equities have traditionally been a safe haven in times of currency devaluations or falling interest rates.

The general index ended at its highest level since Oct. 28, 1997 before the outbreak of the Asian financial crisis.

Traders said there were many non-executed buy orders, suggesting that the price rally will also continue today.

Athens Stock Exchange Chairman Manolis Xanthakis, speaking to the ANA, urged investors to remain calm and reassured them of the market's growth potential.

Mr. Xanthakis said that confidence in the market would increase in line with the success of the government's new economic programme.

The market responded differently to the drachma's previous two devaluations.

The first devaluation in January 1983 by 15 per cent did not have a serious impact on the market mainly because it was anticipated, and due to the fact that it had not been followed by further economic measures.

The second devaluation in October 1985, by 15 per cent again, had a very favourable impact on the Greek market. It helped to boost exports, leading to an economic recovery.

In fact, the drachma's second devaluation was the turning point for a recovery in the Athens Stock Exchange which climaxed in 1987.

Greek bonds attractive after devaluation

Greek state bonds were expected to meet increased demand after the drachma's devaluation and its subsequent entry into the Exchange Rate Mechanism, an economist at Deutsche Morgan Grenfell in London told Bloomberg yesterday.

Steven Ball, chief economist at Deutsche Morgan Grenfell, expects increased demand for Greek state bonds, particularly longterm, a prospect sure to support the drachma.

Mr. Ball said that the devaluation was larger than he anticipated.

Bloomberg, the US news agency, said that the drachma's entry into the ERM was the country's first step towards adopting the single European currency in 2001.

Greek opposition sues charging devaluation leak

Greece's main conservative opposition New Democracy (ND) party filed a suit with the country's supreme court on Monday over an alleged leak of the news the drachma would be devalued which it said damaged the economy and benefitted speculators.

"According to reports, news of the drachma devaluation had been leaked before the decision (for the devaluation) had been taken," ND deputy Prokopis Pavlopoulos told reporters, without citing any names. "Our nation's economy suffered a 30 billion drachma damage to the benefit of speculators."

The drachma was devalued by 14 percent over the weekend to enable it to join the European Exchange Mechanism (ERM) amid widespread rumours and press reports that some international players knew of the government's decision before the official announcement.

Pavlopoulos said the lawsuit, signed by four ND deputies, did not name anyone as responsible for the leak but asked the supreme court prosecutor to investigate the case and charge anyone found responsible.

Government spokesman Nikos Athanasakis said that apart from Prime Minister Costas Simitis, only a handful "of very trusted people" were aware of the government plans to devalue the drachma.

"They included National Economy Minister Yannos Papandoniou and Central Bank Governor Loukas Papadimos," he said.

Papandoniou told reporters on Sunday that the devaluation plans were kept remarkably secret and that on Thursday, the eve of the announcement that Greek government was to request entry to the ERM, only about 200 people in Europe knew of the government's decisions. The devaluation of the drachma was announced on Saturday evening.

Petrol prices raised

The government raised fuel prices as of last night to avoid instances of hoarding or profiteering, Development Undersecretary Mihalis Chrysohoidis said.

The new retail sales price of super gasoline will increase by 3.30 drachmas per litre (an increase of 5.5 per cent); unleaded gasoline by 3.5 drachmas per litre (an increase of 1.78 per cent); diesel by 4.50 drachmas per litre (an increase of 3.1 per cent) and heating oil by 4.20 drachmas per litre (an increase of 5.17 per cent).

Consequently, the new retail sales prices of super and unleaded gasoline in the Attica region and Thessaloniki prefecture will be 214.60 drachmas per litre and unleaded at 198.70 drachmas per litre.

WEATHER

FOREIGN EXCHANGE

(C.E.)

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